Baidu (BIDU) Pops On Earnings But Faces Cyclical Headwinds

Steve Miller

Baidu (BIDU) reported earnings of $2.29 per share and revenue of $3.6 billion, which beat expectations of $2.05 per share and $3.4 billion. The stock responded with a strong rally in Wednesday trading.

As well, analysts from Daiwa Capital and Wells Fargo upgraded the stock to outperform.

BIDU was up around 5% on the news, jumping $16 from $221 to $237 during mid-day trade. However, we think the stock may face headwinds in the medium term.

Using cycle analysis, the technical patterns suggest another drop, potentially below $210. Weakness in Asian markets, as well as a stronger yen may also be factors.

We’re cautious here and think its wise to be patient here.

The market cycles on the chart below are designated by the black semicircles at the bottom of the chart.

BIDU Chart (Weekly Bars)

baidu earnings rally stock price analysis bidu sell_february

 

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Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

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